Do Uber Drivers Even Want To Be Employees?

The typical rideshare driver is hard to define. At last estimate, there were over 300,000 Uber drivers, many of whom are only accessible through Uber and thus hard to find and survey. We do have some data on drivers though. According to Uber, 14% of its workforce is female, 25% of its drivers are over 50, and most drivers tend to come from very diverse racial and educational backgrounds.

Those numbers and findings were all pulled from a recent survey of Uber drivers. Admittedly, there were some problems with this survey seeing that only 11% who were polled responded and all 601 drivers surveyed were compensated for their time. But the one thing that stood out to me in particular is why these drivers value working for Uber:

When Uber partners were asked “If both were available to you, at this point in your life, would you rather have a steady 9-to-5 job with some benefits and a set salary or a job where you choose your own schedule and be your own boss?” 73 % chose the latter.

It might seem obvious that drivers would rather be their own boss and schedule their own hours, but a recent lawsuit brought against Uber (and Lyft) might suggest otherwise. Attorney Shannon Liss-Riordan, who is leading both class-action suits, is representing a group of drivers who claim that they are in fact employees and owed certain benefits and protections. In March, a judge decided that a jury would have to hear the cases and make the ultimate decision.

A class-action lawsuit is headed to trial to determine whether Uber drivers are employees or independent contractors. (AP Photo/Rafiq Maqbool)

W2 vs 1099

It's hard to say which side will ultimately come out on top of this lawsuit but many drivers may not realize that the flexibility they value could very easily disappear with W2 status. I worked for six years as an employee before transitioning to a full time self-employed business owner and the former provided very little in the way of flexibility. In fact, it was my side gig driving for Uber that enlightened me to all of the benefits of being your own boss and setting your own schedule.

Many of the drivers who I've spoken with seem to echo the findings from Uber's study. Tanya Pugh, a driver out of Indiana says that, "The whole reason I do it is because I need the flexibility of not being locked into a set schedule as an employee. If I wanted that, I'd get a part time job with set hours."

That makes sense too. With rates falling lower and lower, drivers are now earning less than ever yet being a rideshare driver is still one of the most flexible jobs in the world. Even at $10-$20/hr, there aren't many jobs that will allow you to work when and where you want. The casual observer might not realize how flexible being a driver is but it really is just as easy as turning the app on/off when you want.

So Why The Lawsuit?

If drivers are found to be employees, it could change the entire landscape of the 'Gig Economy'. Not only do companies like Uber and Lyft rely on independent contractors but so do Postmates, Instacart, Washio, and almost every other player you've never heard of.

We're still a ways off from that but there is no denying the fact that 1099 employment is great for companies like Uber. It allows them to scale up quickly in new markets and it vastly reduces employee acquisition costs. If you've ever worked for a big company, you know all about the extensive training and resources that are afforded to each and every new employee. Uber is able to do the bare minimum though when it comes to all that.

But even though Uber has a workforce of self-employed business owners who are free to set their own hours, there are still lots of policies that don't sit well with drivers. Some might even call them exploitative.

Uber is famous for advertising hourly rates and guarantees to drivers that often don't include Uber's commission or expenses and maintenance.

Despite providing almost no training, drivers are required to maintain a 4.6 rating on Uber's platform. Some drivers (including myself) have never received a single comment/feedback from a rider yet they could be deactivated for low ratings without ever knowing what they did wrong. Uber does offer expensive training after the fact though if you are deactivated.

Despite Uber's claim that drivers are self-employed, they are unable to set their own rates.

The situation isn't perfect for drivers but what is clear though is that these companies are doing better than ever. Uber, Lyft and even Postmates are all seeing record growth and record valuations yet drivers aren't sharing a lot of that success. If you're working 60 hours a week as an Uber driver just to make ends meet, W2 status could mean a lot. But for part-timers like myself and a lot of other drivers, taking away that flexibility could be a deal-breaker.

The judge in the case, Vince Chhabria, noted that, "The jury in this case will be handed a square peg and asked to choose between two round holes. The test the California courts have developed over the 20th Century for classifying workers isn’t very helpful in addressing this 21st Century problem.” That statement couldn't be more true as clearly W2 status is not in the best interest of the companies or a majority of its drivers.

But given free reign, companies like Uber have not shown a willingness to compromise with their drivers without upward pressure. Drivers can hope that guys like Travis Kalanick will do the right thing and come up with a better solution for drivers but you don't get to be the head of a billion dollar company by doing the right thing. Uber has become notorious for "innovate first, regulate later".

Going forward, the courts may need to come up with a new classification of worker, a 'dependent contractor', in order to make this model work for all parties. These companies haven't really shown a propensity to go out of their way to take care of workers so maybe it's time for the government to step up to the plate. It looks like there won't be any real winners in this trial, except for maybe the lawyers.